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Market Structures

Chapter 6 Answer Document


Due:
I. Video Analysis

Internet Source: http://www.learner.org/resources/series79.html?


Title: Video #19 Monopolies
pop=yes&pid=356
Date: updated 2002
Author: David Shoumacher
Length of film: 28:41
Summary of film
POV/ BIAS/ Politics at play? Explain how the government
The monopoly of Rockefeller responded to the monopolies.
and how everything affected
the economy as well as The government passed the Sherman anti-trust act
Grahm.
Economic Terms, Concepts, Topics
Why/ Significance to our
Monopoly
study of economics?
Rockefeller
This is how our government
functions and stays in balance
Sherman Anti-Trust Act 1890
today.
Free enterprise

II. Text Chapter 6

REVIEW QUESTIONS 6.1

Perfect Monopolistic
Buyers Sellers Monopoly
Competition Competition
Product
Differentiate Non-Price Competition
Differentiation
1. Define the terms above.

Perfect Competition: is an ideal market structure in which buyers and


sellers compete directly and fully under the laws of supply and demand

Buyers: are consumers

Sellers: are producers

Monopoly: is a single firm providing a product to the market

Monopolistic Competition: is when sellers offer different products


instead of identical products

Differentiate: is to point out

Product Differentiatition: is to point out differences between their products


and those of their competitors

Non-Price Competition: is they compete on a basis other than price

2. Why do highly competitive markets benefit consumers?

When markets compete, they strive to make a better product and


don’t lax to make money.

3. What is necessary for sellers to compete perfectly?

Buyers and sellers act independently, sellers offer identical products,


buyers are well informed about the products and sellers can enter or
exit the market easily.

4. What characteristics do monopolistic competition and perfect competition


share?

Buyers and sellers act independently, buyers are well informed about
the products and sellers can enter or exit the market easily

5. Thinking and Writing Critically

• Sellers try to differentiate their products in many ways. List three


products you buy.
Water

Shampoo

Phones

• How do manufacturers try to differentiate them?

Manufacturers differentiate them by better taste, better smell and


more application

• Is this market perfectly competitive? Explain.

This market is not perfectly competitive because the products are not exactly
the same

6. Applying

• Choose three products available for sale on the Internet. What type of
competition exists for each one?

Shirts, plates and cups.

Monopolistic competition exists for each product.

• Explain how each product fulfills the conditions necessary for either
perfect or monopolistic competition.

There are many different kinds of shirts, plates and cups but different
companies make them and compete for the sales of them

REVIEW QUESTIONS 6.3

1. Define the following terms: trusts, laissez-faire, antitrust legislation, price


discrimination.
Trusts: large monopolies

Antitrust Legislation: are acts designed to monitor and regulate big


business prevent monopolies from forming and dismantle existing
monopolies

Laissez-faire: when economic systems prosper when the government does


not interfere with the market in any way

Price discrimination: is the practice of offering different prices to different


customers under the same circumstances

2. What motivated the U.S. government to interfere with “big business” in


the 1880s?

People were concerned about the level of control trusts held over the
market

3. What did the U.S. government do to end monopolies?

Passed the Sherman Act

4. How does the government monitor unfair business practices?

Checks the balances necessary for perfect competition

5. Thinking and Writing Critically


• What monopolies exist in your school? Consider how lunches,
yearbooks, and other products are sold at your school. Explain.

We have no say in our lunch price, yearbook price or what we pay


for class rings.

6. Applying
• Identify three ways in which antitrust legislation might protect
your family’s economic interests.

Food prices stay livable, gas prices are acceptable and phone prices
stay affordable

III. RWAAA: Complete A and B.

A. Listen to NPR: The EU Fines Microsoft and create a journal entry or


illustrate a power point to evidence your listening.
• Identify the charges about a Microsoft monopoly and what
possible fines will be levied by the Europeans.

The company did not comply with the anti-trust act

• Do you agree or disagree with the charges levied against


Microsoft?

The charges are rightly imposed

B. Journal Entry:

• U.S Monopolies U.S Monopolies: Create a table describing the four main
types of monopolies-natural, geographic, technological, and government.
• Conduct research on monopolies in the United States. Use the table below
to describe the four main types of monopolies-natural, geographic,
technological, and government-using an actual U.S. company for each
type of monopoly. In the table, describe the three conditions which allows
their monopoly to exist, and why that particular seller’s control of prices is
limited.

Type Name of Three conditions- why sellers ability to


company control prices is limited.
Natural CPS Energy They provide all the same product
Geographic Local Grocery Only on in the area
Store in small
town
Technological Microsoft Only kind of technology
Government Banks Controlled by gov